Sensex fell 332 points to close at 76,059.77, while Nifty 50 dropped 102 points to end the session at the 23,767 mark during Friday’s trading session. The broader markets also saw a strong recovery after a sharp decline in the morning trading hours, with the Nifty Midcap 50 index closing in the green.
Shares of Eternal, Bajaj Finance, M&M and Bharti Airtel fell over 2% each to lead Sensex losses, while Infosys and Asian Paints fell over 1% each. Bucking the trend, HCL Tech shares gained 2%, while ITC and Axis Bank shares gained nearly 1% each.
This came as India’s VIX, which measures volatility in the market, rose more than 4% to 14.03. Sectorally, Nifty Auto fell over 1% to lead the losses, while Nifty IT and Nifty PSU Bank indices gained around 1% each. However, the overall market breadth turned positive with NSE seeing 1,703 advances and 1,596 declines, while 126 stocks remained unchanged.
These are the 7 key factors pushing the market down today:
1) Iran-United States conflict
The US military announced Thursday that it had completed the 13th consecutive night of strikes against Iran. Meanwhile, the Iran-aligned Houthis said they had attacked two Saudi oil tankers in the Red Sea, while announcing they were imposing a naval blockade on Saudi Arabia.
The war between Iran and the United States has seen major escalations this week so far, spooking investors after a fragile ceasefire earlier gave them temporary respite.
2) Oil prices rise
Oil prices soared above $100 a barrel for the first time since May after the Houthis said they had attacked two Saudi oil tankers in the Red Sea. These attacks raised fears that the Bab el-Mandeb sea route could be closed. This waterway connects the Red Sea with the Indian Ocean and is the second most important oil transit channel in the world after the Strait of Hormuz, which also remains affected by conflict.
With oil prices approaching the highs they hit earlier this year, Goldman Sachs warned that Brent crude could rise to $120 a barrel if disruptions to shipping through the Strait of Hormuz, the world’s most important oil transit route, continue. His base case remains that tensions in the Middle East will eventually subside.
3) Rupee falls
The rupee opened lower at 96.63 against the US dollar on Friday, compared to the previous close of 96.5725. As the Indian currency approaches its lowest point, the Reserve Bank of India likely intervened in the currency market today, Reuters reported.
“Going forward, the rupee will continue to depend on the US dollar index, crude oil prices and FII flows, which remain key drivers for the domestic currency. Technically, the rupee is expected to trade in the range of 96.25 to 96.90 in the near term,” said Jateen Trivedi, vice president of research and commodity and currency analyst at LKP Securities.
4) sale of FII
Foreign investors remained net sellers of Indian stocks on Thursday, offloading shares worth over Rs 2,999 crore, according to provisional NSE data. After a long buying streak earlier this month, foreign investors have mostly been selling since mid-July.
Persistent selling by foreign investors hurt sentiment on Dalal Street, which in turn may lead to some slowdown in the market.
5) Weak global signals
Dalal Street today accompanies its global peers in the liquidation. South Korea’s Kospi, which remains in the bear market despite being the world’s best-performing stock market in 2026, plunged another 6% to 6,678.
Japan’s Nikkei fell 3%, while Taiwan’s weighted fell more than 2%. China’s Shanghai Composite and Hong Kong’s Hang Seng fell more than 1% each.
6) Fed rate hike expectations
Rising oil prices and resulting inflationary pressures raised expectations that the US Federal Reserve would raise interest rates. Traders are now pricing in an 82% chance that the US central bank will raise interest rates at its September policy meeting, according to CME’s FedWatch tool.
7) Bond yields rise
US Treasury yields rose, further denting stock market sentiment. The benchmark 10-year US bond yield rose to 4.708%, while the 30-year bond yield rose to 5.174%. Rising bond yields typically make bonds more attractive to investors, which in turn can cause some bearishness in the markets.
What awaits us?
Complete uncertainty and high volatility in the markets continues with no signs of immediate respite, said VK Vijayakumar, chief investment strategist at Geojit Investments. He added that the attack on Saudi oil tankers by the Iran-backed Houthis in the Red Sea is the main reason for the recent sharp rise in Brent crude oil to around $100. “Such a high price is sure to revive concerns about India’s balance of payments. The rupee has also been affected, albeit slightly, with the currency depreciating to 96.57 per dollar,” he said.
“With the rupee weakening again, FPIs that had turned buyers on many days this month have gone back into selling mode. The rise in US 10-year bond yield to 4.7% is negative for global equity markets. This is a short-term risk,” the analyst said.
New tariff tantrums remain a key issue
Another key aspect will be how Trump’s new set of tariffs will play out. The United States imposed 10% tariffs on goods purchased from India and 16 other countries over what it called its failure to impose bans on imports made with forced labor. This comes as a temporary 10% global tariff expires.
This marks the latest effort by the White House to restore US President Donald Trump’s campaign vision of a near-global tariff after the US Supreme Court in February struck down his 10% to 50% “reciprocal” tariffs imposed last year under a national emergency law.
Pakistan, Bangladesh, Cambodia, Sri Lanka and the United Kingdom have also received 10% tariffs. Notably, India amended its foreign trade policy to ban the import of goods produced through forced labor in June this year. The United States had launched another investigation in March alleging excess capacity in certain assets.
Nifty Technical View
Nifty 50 has plunged below bullish consolidation on the daily chart, suggesting increasing bearishness in the market, said Rupak De, senior technical analyst at LKP Securities. He added that the index has fallen below the critical short-term moving average.
“The RSI indicator shows a bearish crossover and is falling. The sentiment seems negative and the market could remain weak in the short term. At the lower end, the index could fall towards 23,600 or even lower in the short term. At the upper end, 24,000 could remain a resistance for the next few days,” De said.
(With contributions from agencies)
(Disclaimer: The recommendations, suggestions, views and opinions given by the experts are their own. They do not represent the views of The Economic Times)
